6. Recognizing expected losses immediately, but deferring expected gains, is an example of:

A. Conservatism.

B. Timeliness.

C. Cost-effectiveness.

D. Materiality.

7. Disclosure notes to a company's financial statements:

A. Document the source of financial statement facts, like literary footnotes.

B. Are irrelevant facts that are immaterial in amount.

C. Are an integral part of a company's financial statements.

D. Are relatively unimportant facts that don't belong in the basic financial statements.

8. Providing services and receiving cash concurrently will:

A. decrease liabilities and increase shareholders' equity.

B. decrease assets and increase liabilities.

C. increase assets and increase shareholders' equity.

D. increase assets and increase liabilities.

9. How many of the following transactions would increase total shareholders' equity in the current period?

Declare and pay dividends to shareholders on the same date

Delay payment on supplies purchased until the following period

Provide services on account to customers

Borrow cash from a local bank

A. Four

B. One

C. Three

D. Two

10. Which of the following is true about a "credit?"

1. I. It is part of the double-entry system used in accounting to process transactions.

2. II. It represents a decrease to asset account balances.

3. III. It represents an increase to liability account balances.

4. IV. It is on the right side of a an account.

A. I and II

B. I, II, and III

C. I, II, III, and IV

D. IV only